By Eric Cheang
Southeast Asia’s retail and e-commerce sectors are experiencing explosive growth, attracting brands from around the world to capitalise on this burgeoning market. In just a few years, the region’s e-commerce market has skyrocketed from US$5.5 billion in 2015 to an impressive US$100 billion by 2021. This surge can be largely attributed to Southeast Asia’s rising middle-class and tech-savvy population, making it a very attractive prospect for retailers.
Notably, nearly 25 percent of consumers in the region have made cross-border purchases and 22 percent have started shopping on websites outside of Southeast Asia. The region’s diversity offers up a myriad of tastes and preferences, allowing new and emerging retailers to tap into a rich tapestry of opportunities.
However, a region like Southeast Asia also comes with its own set of complexities. The volatility of supply chains, particularly in manufacturing hubs such as China, has led logistics players to rethink their strategies. Unpredictable supply chains can lead to delays and increased costs for retailers, and also impact inventory management, customer experience and trust.
Yet in today’s business landscape, supply chain speed and efficiency are pivotal for growth, particularly when expanding into new markets. A key strategy that can deliver a substantial competitive edge is cross-docking, which can yield significant improvements in efficiency and handling times.
Facilitating global expansion through cross-docking
Implemented appropriately, cross-docking can facilitate market entry for retail brands. By enabling suppliers or manufacturers to directly distribute products to end users, including retailers or consumers, with minimal to no storage or handling time, it eliminates the need for complex warehousing structures, reduces storage and packaging costs, and optimises transport and distribution.
Traditional supply chain models typically depend on warehousing as a buffer against fluctuations in consumer demand, holding products during periods of overproduction or reduced demand. However, this also creates financial overheads and ties up capital.
Instead of relying on warehousing as a safeguard, cross-docking leverages real-time data sharing, in-depth analysis, and the adoption of practices like just-in-time stocking, to minimise the volume of inventory on hand at any given time. With cross-docking, products spend minimal time at the terminal, typically less than 24 hours and sometimes even less than an hour. Cross-docking terminals are also designed to streamline material handling, which includes in-motion labelling, weighing, label verification, and destination scanning.
This rapid turnover, coupled with the accelerated screening and processing of products at cross-docking terminals, ensures that products reach their destinations quickly and facilitates faster deliveries to customers.
The end result is a more agile and cost-effective supply chain solution that can swiftly respond to changes in consumer preferences and market dynamics, thereby slashing unnecessary expenses and enhancing supply chain efficiency. When integrated into a global logistics network, cross-docking enables companies to enjoy competitive rates and streamlined shipping processes.
Such improvements in processing and fulfilment times can go a long way in satisfying customer expectations, building trust, and gaining a competitive edge in a new market.
Championing cross-docking in Southeast Asia
Leveraging over a decade of experience in navigating the intricacies of the Southeast Asian market, ZALORA’s cross-docking technology offers brands a simplified route into the region. The first phase of ZALORA’s International X-Docking Programme was launched in Turkey in Q3 2023, with plans to onboard more brands using a combination of direct and cross-docking just-in-time (JIT) models.
Through the programme, which integrates with ZALORA’s logistics network and distribution centres strategically located throughout the region, brands can sell their products in this region without the need to establish physical stores or having to navigate legal complexities. This lowers the entry barriers significantly, making the region accessible to brands of all sizes. They also leverage ZALORA’s well-established e-commerce platform to showcase their product offering to an extensive and diverse customer base across Southeast Asia. This increases product visibility and prospects for increased sales, helping brands gain a foothold in the market.
The programme also alleviates another key concern for global brands entering new markets – the potential risk of customer returns. Brands can list their global collections on the ZALORA platform and the logistics of potential returns are carefully managed within the platform. ZALORA is known for its consistent seamless delivery and reliable returns service, which is trusted by customers and makes it the go-to online shopping destination across Southeast Asia. This commitment to delivering a superior customer experience has resulted in ZALORA having one of the highest Net Promoter Scores (NPS) in the region.
By working with the right partner in the region, brands can rely on their expertise to ensure that orders are fulfilled promptly and seamlessly, which is crucial for customer satisfaction and loyalty.
Cross-docking is a powerful logistics strategy that can help retail brands seize opportunities in a new market by streamlining their supply chain, reducing costs, and ensuring timely product delivery. By understanding its benefits and requirements, retail brands can effectively use cross-docking to facilitate their market entry and gain a competitive advantage.
As millions of Southeast Asian consumers continue to embrace e-commerce and a mobile-first lifestyle, brands and retailers that embrace innovative logistics solutions are poised to unlock the many opportunities of this dynamic region.
Eric Cheang is senior director and head of category management, ZALORA